China, the world's largest rubber consumer, was on the sidelines because of a rebound in Tokyo futures, while Thai sellers held on to their inventory after floods hit the country's main growing area, dealers said on Tuesday. Indonesia, the world's second-largest rubber producer after Thailand, was still reluctant to sell tyre grade after a combination of dry and wet weather hit supply in the key growing island of Sumatra.
A few cargoes of Thai RSS3 and STR20 tyre grades changed hands late on Monday at $3.245 to $3.25 a kg for January delivery, up from $3.20 last week as gains in rubber futures on the Tokyo Commodity Exchange (TOCOM) lifted physical prices. Last week, RSS3 for December changed hands at a discount to January, which indicated ample supply for nearby cargo. "I don't hear any offers for December. I think sellers are very selective on nearby shipment. If they think price is OK, then they will sell it. I don't see sellers chasing buyers this time," said a dealer in Malaysia, who trades Thai grades.
The most active contract on TOCOM, currently May 2012 delivery, rose 2.6 yen to settle at 271.6 yen, off a near 2-year low at 248.6 yen a hit in early November, on rising oil prices and worries about supply disruptions. Heavy rains caused flash flooding and landslides in several provinces along the Gulf of Thailand, uprooting trees and destroying some plantations completely. The floods also played havoc with rubber tapping. In Indonesia, the dry wintering season progressed in the southern part of Sumatra.